Theresa Tedesco: Gord Nixon should take little comfort, amid the PR fiasco engulfing Royal Bank, that it was all an unfortunate misunderstanding. Continue reading . . .

“We work very hard as an institution to ensure that we put a very high priority on Canadian jobs,” Nixon said during an interview on CBC’s Metro Morning program in Toronto.

Nixon sought to clarify reports that 45 of the bank’s Canadian employees would be losing their jobs as a result of its decision to farm out some technology positions to international contractor iGate.

Nixon said the bank is working to find other positions within the company for those employees whose jobs were contracted out.

“We have indicated to these people from day one that our intention with respect to this contract, which is a restructuring of a business that we’ve acquired, is to ensure that we find employment for the 45 people,” Nixon said.

Nixon described RBC’s track record on outsourcing as ‘quite impressive,’ adding that there are plenty of other Canadian companies that contract work out to international suppliers.

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Controversy over the bank’s decision to outsource dozens of jobs continues to mount. The federal government has launched an investigation scrutinizing the application documents submitted by iGate in its case to bring in foreign workers to provide services to Canada’s largest bank.

“HRSDC officials are currently reviewing the labour market opinions submitted by iGate in great detail, based on apparent discrepancies between RBC’s public statement and information which has previously been provided to the government,” said Alyson Queen, a spokeswoman for Human Resources Minister Diane Finley.

To obtain permits for temporary foreign workers, companies need to show a Canadian cannot be found to do the work.

iGate is defending its business practices and says it will “fully co-operate” with a government investigation into its efforts to bring workers into Canada under the temporary foreign worker program so those employees could train at RBC for services they will be providing to the bank.

Jason Trussell, senior vice president and regional head of iGate Canada, says iGate’s hiring practices are in “full compliance with all Canadian laws.”

The multinational company is headquartered in the U.S. and employs more than 28,000 people around the world.

Nixon said Tuesday that the bank doesn’t usually get involved in the hiring practices of firms it uses as subcontractors, but that he has called for a full review of all the bank’s major supply contracts.

The bank said Monday that it was delegating certain services to an external company that brought in its own employees for training at the bank’s offices in Canada. The bank (TSX:RY) said it recognized the impact such an arrangement has on its employees.

Observers analysing the situation said RBC’s actions were part of a bigger story.

The Canadian government has been aggressively encouraging employers to use temporary foreign workers,” said University of Toronto professor Audrey Macklin, who specializes in immigration law.

According to Macklin, the government encourages companies to employ temporary foreign workers either directly or indirectly by processing their immigration documents faster and by allowing companies to pay them less than Canadians.

“In effect, the government of Canada subsidizes employers to the tune of five to 15% of labour costs on the backs of temporary foreign workers and at the expense of Canadians,” said Macklin, adding that companies often turn to external suppliers to access a pool of temporary foreign workers.

The government has repeatedly said the Temporary Foreign Worker Program is only to fill “acute labour needs” when Canadians aren’t available for the work required.

But NDP Leader Tom Mulcair says the Conservatives have done nothing to stop a situation like RBC’s.

“We see the banks and other large companies with their lawyers setting up these systems where Canadians can be deprived of their livelihood,” he said Monday.

The rapid expansion of the temporary foreign worker program has raised concerns that Canadian companies are filling job vacancies with cheaper workers from overseas rather than actively finding Canadians to fill the jobs.

In 2012, there were more than 213,000 foreign workers in Canada, compared with over 160,000 immigrants who arrived under the federal skilled worker program.

What’s missing, said one immigration expert, is a breakdown of what jobs those temporary workers are holding, and for how long.

“If in fact one of the contributing factors to the exponential growth of the temporary foreign worker program has been workers who are coming to Canada for very short stage and returning to work for a third party, that, I think, really does undermine the very rationale for having a temporary foreign worker program in the first place,” said Queen’s University professor Sharryn Aiken.

The issue of outsourcing, however, is not a new one.

“Outsourcing is inevitable. The economics are so overwhelming it’s not going to go away,” said Ron Babin, a Ryerson University professor and outsourcing expert. “It’s important to know how to manage it and how to govern it and how to manage the relations with the outsource provider.”

Employers capitalizing on the benefits of global outsourcing need to ensure they take care of their employees at home if the practice is to work well, he said.

“It’s important for any organization that takes on outsourcing to be very sensitive to the needs of workers… That’s why it’s touched a nerve with so many Canadians.”

RBC has faced a firestorm of online reaction, with some Canadians even saying they closed their accounts with the bank on Monday.

One labour economist argued that some of that public anger was rooted in the fact that employers weren’t revising their wages to attract Canadian labour for certain positions.

“When the price of labour looks like it goes up, it looks like Canadian firms are just going offshore to get the labour they want,” said Lars Osberg, an economics professor at Dalhousie University in Halifax.

“They’re not bothering to try the alternative of raising wages.”

In late February, RBC reported a first-quarter profit of $2.07-billion, or $1.36 per share, up from $1.86-billion, or $1.23 a share, a year ago. Its revenue grew to $7.91-billion, from $7.57-billion a year earlier.

With the evolution of the lithium-ion battery and pending availability of an affordable electric vehicle, we decided it was a good time to produce a Ubika Battery Metals Index, comprised of 10 lithium and 10 cobalt companies.

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